58. 5. 24. 55. 2. 44. The assets disposed of were Wesfarmers' interests in Wesfarmers Bengalla Pty Ltd, Wesfarmers Curragh Pty Ltd, Tyre & Auto Pty Ltd and Quadrant Energy Holdings Pty Ltd, as well as 10.1% of Wesfarmers' 15% shareholding in Coles Group Limited. A scheme for the purpose of section 45B is defined under subsection 995-1(1) of the ITAA 1997 to include: 50. As at March 2020, approximately 26.15% of Wesfarmers' shareholders are foreign residents (as defined in subsection 995-1(1)). a CGT asset that is covered by subsection 104-165(3) of the ITAA 1997 (choosing to disregard a capital gain or capital loss on ceasing to be an Australian resident). The payment was made on Thursday, 2 December 2021 into the bank account recorded on the register. 45. No part of the return of capital to a Wesfarmers shareholder will be a dividend, nor included in a shareholder's assessable income. If the return of capital of $2.00 per Wesfarmers share you received was not more than the cost base of the share, the Cost base / reduced cost base of each share is reduced by the amount of the return of capital (subsection 104-135(4)). The Ruling continues to apply after 30 June 2014 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. 13. 39. The arrangement involving Wesfarmers return of capital to the Wesfarmers shareholders will constitute a 'scheme' for the purposes of section 45B. As the share capital account of Wesfarmers is not tainted within the meaning of Division 197 of the ITAA 1997, paragraph (d) of the definition of 'dividend' in subsection 6(1) will apply and the return of capital will not constitute a dividend under subsection 6(1). 6. 36. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. The ATO has issued Class Ruling CR 2018/59 . The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its shareholders. This amount represents your capital proceeds. 35. This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. The following description of the scheme is based on information provided by the applicant. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people. The class of entities to which this Ruling applies are the holders of ordinary shares and/or partially protected ordinary shares in Wesfarmers Limited (Wesfarmers) who: In this Ruling, a person belonging to this class of entities is referred to as a 'Wesfarmers shareholder'. The ATO has issued a Class Ruling CR 2018/59 for this demerger, and a copy can be obtained on the Wesfarmers website at www.wesfarmers.com.au. ITAA 1997 975-300 24. 58. 18. 57. You can treat a capital gain made when CGT event G1 or CGT event C2 happened as a discount capital gain if you acquired your Wesfarmers shares at least 12 months before the Payment Date (subsection 115-25(1)), provided the other conditions in Subdivision 115-A are satisfied. The Australian Taxation Office has given Wesfarmers the all-clear to hand over $1.1 billion to shareholders. ITAA 1997 104-135(3) ITAA 1997 855-10(1) If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. Shares commence trading on an ex return of capital basis. Wesfarmers anticipates that it will pay a fully franked dividend of approximately $1.2 billion ($1.03 per share) on or around the end of September 2013 from its retained earnings account. sold their shares while the shares were trading on a cum return of capital basis (i.e., before Wednesday, 17 November 2021); or. Wesfarmers website ATO Class Ruling 2014/76 Capital Management Initiative Key Dates Scenario: The fund held 1000 shares as at the record date. 21. The return of capital was debited to Wesfarmers' share capital account and the following accounting entry was recorded: 27. If, after the Record Date but before the Payment Date, a Wesfarmers shareholder ceases to own some, or all, of their shares in Wesfarmers, the right to receive the payment of the return of capital in respect of each of the shares disposed of will be retained by the shareholder and is considered to be a separate CGT asset. Accordingly, all shareholders are encouraged to seek their own professional advice in relation to their tax position. The Australian Taxation Office (ATO) has published a Class Ruling in relation to the taxation treatment of the $2.00 per share return of capital to Wesfarmers shareholders, which was paid on 2 December 2021. The payment of the return of capital to Wesfarmers shareholders will not be a dividend, as defined in subsection 6(1). 6. There were no CGT events affecting the cost base of his shares before the return of capital in December 2003. Taxation Administration Act 1953. The Board considered that the return of capital was fair and reasonable to shareholders as a whole, and would not materially prejudice Wesfarmers ability to pay its creditors, or impact on its solvency position. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1936, unless otherwise stated. Wesfarmers has obtained a Class Ruling CR 20from the ATO which governs the Australian tax21/87 treatment of the return of capital to Wesfarmers shareholders who hold their shares on capital account. The right to receive the payment of the return of capital is one of the rights inherent in a Wesfarmers share at the Record Date. shares held within the Deferred Plans at the time of the return of capital payment), the cost base for each share held on behalf of employees was reduced by the return of capital amount. The capital return was $2.50 per share. Shareholders who did not provide the share registry with their bank account details, may complete a paper Direct Credit Payment Form, which is available from Wesfarmers share registry, Computershare Investor Services Pty Limited, or provide their details online to Computershare at www.computershare.com.au/easyupdate/wes. A Wesfarmers shareholder will make a capital gain if the capital proceeds from the ending of the right are more than its cost base. Did I have the choice to participate in the capital return? The record date for the capital return payment was 4:00pm(Perth time) on Friday, 19 November 2021. 73. Corporations Act 2001 256B As discussed in paragraph 52 of this Ruling, the payment of the return of capital to Wesfarmers shareholders will be a capital benefit. 9. 44. The return of capital was made possible by the Wesfarmers Groups continued strong cash flow generation and the receipt of approximately $4.3 billion in proceeds from the sales of a number of assets during FY2018 to FY2020. How much did I receive and how was the payment made? The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 30 of this Ruling. 22. the return of share capital (return of capital) from Suncorp Group Limited (SGL) on 24 October 2019 (Payment Date). Wesfarmers has confirmed that its share capital account (as defined in section 975-300 of the ITAA 1997) is not tainted (within the meaning of Division 197 of the ITAA 1997). ITAA 1997 Div 197 Section 855-15 sets out the categories of CGT assets that are taxable Australian property: 63. Subsection 44(1) includes in a shareholder's assessable income any dividends, as defined in subsection 6(1), paid to the shareholder out of profits derived by the company from any source (if the shareholder is a resident of Australia) and from an Australian source (if the shareholder is a non-resident of Australia). A Wesfarmers shareholder's right to the payment of the return of capital is not an 'indirect Australian real property interest' as defined in section 855-25 of the ITAA 1997. Mark must adjust the cost base and reduced cost base of his Wesfarmers shares by subtracting the amount of the capital return. CGT event G1 (section 104-135 of the ITAA 1997) happens when. Sections 45A, 45B and 45C of the ITAA 1936 do not apply 8. In broad terms, section 45B of the ITAA 1936 applies where: 49. This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. For each of these shares, you have made a capital gain of: For shares with a cost base equal to or greater than $2.50, you have made no capital gain as a result of the return of capital. ITAA 1997 855-10 The following tables sets out what method you can use. However, having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme was entered into or carried out for a more than incidental purpose of enabling Wesfarmers shareholders to obtain a tax benefit. Therefore, if the full cost base or reduced cost base of a Wesfarmers share has been previously applied in working out a capital gain or capital loss made when a CGT event happened to that share, the right to receive the return of capital is likely to have a nil cost base. The capital return was completed on 18December 2003. ITAA 1997 995-1(1) if the cost base (after any adjustment, as may be relevant, for any indexation, any previous return of capital or as a result of the Coles demerger) of a share acquired after 19 September 1985 is less than the return of capital amount (on a cents per share basis), then an immediate capital gain will arise for the difference. A Wesfarmers shareholder who is a foreign resident just before CGT event C2 happens, disregards any capital gain or capital loss made when CGT event C2 happens if their right to the return of capital is not 'taxable Australian property' (section 855-10 of the ITAA 1997). Aussie supermarkets set to capitalise on high inflation, but softer demand ahead, WESFARMERS LIMITED : Ex-dividend day for interim dividend, Out of lockdown, Kmart pushes Australia's Wesfarmers to higher profit, Transcript : Wesfarmers Limited, H1 2023 Earnings Call, Feb 15, 2023, Wesfarmers Raises Dividend as Fiscal H1 Profit, Revenue Increase, Australian Stock Exchange - 12:10:24 2023-03-01 am EST. Sections 45A and 45B are anti-avoidance provisions which, if they apply, allow the Commissioner to make a determination that section 45C applies to treat all or part of the return of capital to be received by Wesfarmers shareholders as an unfranked dividend. CGT event G1 happened on the Payment Date when Wesfarmers paid you the return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and continued to own at the Payment Date (section 104-135). Wesfarmers Ltd. published this content on 08 December 2021 and is solely responsible for the information contained therein. On 27 August 2021, Wesfarmers announced that it will return share capital to Wesfarmers shareholders of $2.00 per Wesfarmers share totalling $2.3 billion (return of capital). ITAA 1997 Div 110 You will make a capital loss if the capital proceeds from the ending of the right are less than the reduced cost base of the right. If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take. 65. 71. A copy of the Class Ruling is available from the Wesfarmers website (www.wesfarmers.com.au). This is a Tax Office ruling on the tax consequences arising from this return of capital. As such, paragraph (d) of the definition of 'dividend' in subsection 6(1) of the ITAA 1936 applies and the return of capital is not a dividend. 20. The application of sections 45A, 45B and 45C to the return of capital. 5. He paid $2,900 ($14.50 per share) plus brokerage of $150 - making his cost base $3,050, or $15.25 per share. ITAA 1936 44(1) 70. 8 December 2021. As a result, you will, in those circumstances, make a capital gain equal to the capital proceeds, being $2.00 per Wesfarmers share owned at the Record Date. 67. How do I provide, update or check my bank account details? The capital gain will be a discount capital gain for shareholders that are an individual, trust or complying superannuation fund and acquired their shares at least 12 months before the payment date. ITAA 1997 115-25(1) This payment was: A CGT event happened on 18 December 2003, when Wesfarmers made a capital return on the shares that you held in the company. CGT event C2 happened to your right to receive the return of capital on the Payment Date when Wesfarmers paid you a return of capital of $2.00 for each Wesfarmers share you owned at the Record Date and ceased to own before the Payment Date (section 104-25). NEWS 11 September 2013 ATO CLASS RULING ON CAPITAL RETURN PROPOSAL The Australian Taxation Office has published a Class Ruling relating to. according to an ATO ruling. 21. 60. 33. This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the . Ruling Return of capital is not a dividend 7. Section 45B - schemes to provide capital benefits. The ruling has determined that the funds will be distributed via a return of capital of 75c per share and a fully franked dividend of 25c. 54. The return of capital will be affected by way of an equal reduction of capital under section 256B of the Corporations Act 2001 (Corporations Act), and requires shareholder approval by ordinary resolution under section 256C of the Corporations Act. At the Annual General Meeting, held on 21 October 2021, Wesfarmers shareholders approved the return of capital. 64. She must use the indexed cost base method in all future events affecting these shares. CGT event G1 in section 104-135 of the ITAA 1997 will happen when Wesfarmers pays the return of capital to a Wesfarmers shareholder in respect of a Wesfarmers share that they own at the Record Date and continue to own at the Payment Date. For more information on how to work out the cost base and the reduced cost base of shares, see the Guide to capital gains tax. 8. Wesfarmers shareholders received a $1.00 per share cash distribution. If the Wesfarmers share to which the return of capital relates was acquired by a Wesfarmers shareholder at least 12 months before the payment, a capital gain from CGT event G1 happening may qualify as a discount capital gain under subsection 115-25(1) of the ITAA 1997, provided the other conditions in Division 115 of the ITAA 1997 are satisfied. Australian Taxation Office for the Commonwealth of Australia, Aboriginal and Torres Strait Islander people, An indirect Australian real property interest not covered by item 5, A CGT asset used at any time in carrying on a business through a permanent establishment in Australia and which is not covered by items 1, 2, or 5, An option or right to acquire a CGT asset covered by items 1, 2 or 3. Since 2009, the dividend payout of Wesfarmers has been as follows: 14. Class Ruling CR 2014/76 Page status: legally binding Page 1 of 29 Class Ruling . Return of capital amount - $5.68 for each entitled WES share. 3. 43. ITAA 1997 104-135(4) Corporate Archer Materials Limited (ACN: 123 993 233) ATO Class Ruling Lot Fourteen, Frome Road, Adelaide SA 5000 ASX Announcement (ASX: AXE) 16 December 2021 Capital Return - ATO Class Ruling Published Archer Materials Limited ("Archer", the "Company", "ASX:AXE") advises that the Australian Taxation Office has published a Class Ruling (CR 2021/98) (the "Ruling") relating to the . 55. they have not reached the ESS deferred taxing point), the return of capital payment gave rise to a capital gain for tax purposes. ITAA 1997 104-165(3) The Record Date for the return of capital is expected to be on 15 November 2013. For participants in all other Australian employee share plans, the tax implications are as follows: For shares that had not reached their ESS deferred taxing point at the time of the return of capital payment (i.e. Shares may have traded at a lower price from the ex return of capital date than they otherwise would have done had the return of capital not occurred. 25. The table sets out these five categories of CGT assets: 77. Full details of this scheme are set out in paragraphs 15 to 38 of this Ruling. ITAA 1936 45B(3)(b) Make sure you have the information for the right year before making decisions based on that information. A relevant taxpayer 'obtains a tax benefit' as defined in subsection 45B(9), if: would, apart from the operation of section 45B: if the capital benefit had instead been an assessable dividend. The Australian Taxation Office (ATO) has published a Class Ruling in relation to the taxation treatment of the $2.00 per share return of capital to Wesfarmers shareholders, which was paid on 2 December 2021. 59. The Australian Taxation Office (ATO) has published a Class Ruling in relation to the taxation treatment of the $2.00 per share return of capital to Wesfarmers shareholders, which was paid on 2 December 2021. Wesfarmers is committed to efficient capital management and its focus on providing a satisfactory return to all shareholders. The amount of the capital gain is equal to that excess. What are the capital gains tax consequences for me? The ATO Class Ruling confirms that there will be no immediate tax liability relating to the return of capital for most Wesfarmers . 17. 53. 29. Having regard to the relevant circumstances of the scheme, it cannot be concluded that the scheme is proposed to be entered into for a more than incidental purpose of enabling a taxpayer to obtain a tax benefit. 76. You received 200 cents for every share you held as a registered holder on the record date of 4:00pm (Perth time) Friday, 19 November 2021. 12. 81. Maria can apply the CGT discount (50% for individuals) to reduce this amount to $100 ($200x50%). NO 1-4UM8A44, Related Rulings/Determinations: For the purposes of paragraph 45B(2)(c), the Commissioner is required to consider the 'relevant circumstances' set out in subsection 45B(8) to determine whether any part of the scheme would be entered into for a purpose, other than an incidental purpose, of enabling a relevant taxpayer to obtain a tax benefit. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 unless otherwise indicated. Wesfarmers derived a net profit after tax of $1.335 billion from the disposal of the assets, which was paid to shareholders as special dividends in April 2019 and October 2020. ITAA 1997 Div 230 On 27 August 2021, Wesfarmers announced that it will return share capital to Wesfarmers shareholders of $2.00 per Wesfarmers share totalling $2.3 billion (return of capital). Cgt events affecting the cost base of his shares before the return of capital in 2003! To efficient capital Management and its focus on providing a satisfactory return all... Amount to $ 100 ( $ 200x50 % ) October 2021, Wesfarmers will! 855-10 the following tables sets out the categories of CGT assets that are taxable Australian property 63. Be disclosed or released under Freedom of information legislation identified in this Ruling Act 1953 1997 Div section. 1.00 per share cash distribution is committed to efficient capital Management and its focus on providing a return! 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